For years now, the convenience industry has argued that beer and wine is the biggest untapped opportunity for the majority of Canadian corner stores. And the pandemic has starkly illustrated that it is also the best bet for the industry to future-proof its economic health, amid changing consumer expectations and shifting core categories, such as tobacco, vaping (heavily regulated), lottery (increasingly digitized), and fuel.
Quebec is one of only two provinces where beer and wine is sold in c-stores. Taking into account only beer, sales are so good in Quebec that it ranks as the second-largest convenience category for all of Canada. And it is continuing to grow (see infographic).
To survive and thrive
According to data from the Convenience Industry Council of Canada (CICC), between 2016 and 2019 stores in Ontario closed at twice the rate in Quebec—618 compared to 301. “There is also evidence that the declines have been much sharper in Ontario in rural populations,” says Anne Kothawala, CICC president and CEO. “This underscores that expansion of beverage alcohol could literally be one of the determining factors as to whether rural stores can survive.”
The industry association has been running a campaign, Choose Convenience. Choose Ontario, urging the Ontario government to allow c-stores to sell Ontario-made wine and beer, which would help prop up the more than 350 wineries and 300 micro-breweries (although the big guys have factories here, as well).
READ: CICC calls on Ontario to allow convenience stores to sell local craft beer, wine, coolers
It’s the latest in a long line of industry initiatives, including the Convenience and Choice coalition (made up of CICC, Ontario Convenience Stores Association, Ontario Korean Businessmen's Association and Free My Booze) advocating for the sale of beer and wine at convenience. In 2018, Premier Doug Ford promised to make beer available in corner stores (it looked promising, however plans fell apart due, in part, to disagreements over the master framework agreement, which is to expire in 2025) and the CICC is reminding him of that promise ahead of the provincial election in June.
“What we are really looking towards is getting something included in Conservative government’s spring budget, as it will be their de facto platform leading into the election,” says Kothawala.
MPP Stan Cho, who has strong ties to the industry and championed to designate the week before Labour Day as Convenience Store Week in Ontario, touched on the issue of beer and wine when speaking at a recent industry event: “I know there is more to be done… I will work tirelessly to make sure we get that done in this province sooner than later.”
The Ontario Convenience Stores Association (OCSA), meanwhile, is encouraging its members to get ready. It has partnered with a fintech company, Liquid Avatar Technologies, and the Ontario government to develop a digital age verification program for beer and wine purchases.
“It could work like the lottery with a digital reader in every store or via a QR code,” says OCSA CEO Dave Bryans, who is an outspoken advocate in the quest to get beer and wine in corner stores.
READ: Thirsty for change
CJ Hélie, president at Beer Canada, which represents over 50 brewing companies across the country, says there are encouraging signs that Ontario might move on the promise. “The province has enjoyed some very significant alcohol liberalization initiatives over the past 20 months or so, many driven as a function of COVID,” says Hélie, noting restaurants, for instance, can now deliver alcohol with take-out or delivery orders in many provinces. Saskatchewan also now allows this.
Should it open up, the category isn’t without substantial challenges, however. For instance, in Ontario, “our analysis shows that 45% of the price of beer at retail are taxes, so there is very little operating margin there to play with,” cautions Hélie.
Still, liquor would get more customers into convenience stores and more frequently: Quebec stores have developed strategies that stores in other provinces could adopt to make the most of the category. (See “Secrets to success: The Quebec experience” below)
The bottom line
The category and its potential are top of mind for independent, as well as regional and multinational chains.
“Beverage alcohol is an important traffic builder for our Quebec market and is no doubt a promising opportunity for other Canadian markets to explore,” Stéphane Trudel, SVP operations Canada, Alimentation Couche-Tard, told Convenience Store News Canada. “Our success is driven by the quality of our offering and promotions, but also our by our commitment to constantly tailoring the customer offering and experience and most importantly by being a responsible retailer in the communities we serve.’’
Trudel was one of three panelists (including 7-Eleven VP & GM, Norm Hower, and Parkland Corporation SVP, strategic marketing and innovation, Ian White) who spoke passionately about the issue at the CICC Summit last fall. All agreed consumers' expectations are evolving in this on-demand world and the category is essential if c-stores are to offer real convenience to customers. The leaders emphasized this is also the channel’s best opportunity to grow. All are working aggressively to make it happen.
7-Eleven Canada filed an application with the Alcohol & Gaming Commission of Ontario for on-site liquor sales at 61 locations last year, though at press time had withdrawn some applications. 7-Eleven did, however, introduce beverage alcohol at an Edmonton store in December, capitalizing on new and relaxed consumption rules from the Alberta Gaming, Liquor & Cannabis Commission. More stores are likely to follow.
READ: 7-Eleven opens the taps on serving beverage alcohol
MacEwen, which acquired Quickie Convenience Stores last fall, also hopes to carry beer and wine.
“It would significantly improve traffic in our Ontario stores, support an overall increase in sales and help profitability, as these customers don’t buy only alcohol but also snacks,” says Hélène Drolet, MacEwen’s SVP and GM of retail.
What makes Drolet so sure? She can look at Quickie’s 12 stores in Gatineau, Que., and see the difference between their performance and the Quicki stores in Eastern Ontario. “It’s a very important category,” she stresses.